Multipurpose Shipping Industry Shows Promise, Drewry Reports

Empty road and containers in harbor at sunsetThe multipurpose shipping industry is seeing a rise in demand. This is according to the latest report by Drewry, a global shipping consultancy firm. Marine Log reports that this uptick was particularly prevalent in the breakbulk industry, after a dip in 2016. Drewry analysts expect this trend to gradually continue into 2018.

“While we believe that 2017 will be slow, the prospects for the second half of the year and into 2018 continue to strengthen and give rise to our optimism for this sector,” Susan Oatway, lead analyst for multipurpose shipping at Drewry, said in a statement.

The breakbulk industry carries loose materials rather than packaged materials. For example, metals like the four types of alloyed steel (structural, tool and die, magnetic, and stainless and heat rising) are often transported via boxes and crates rather than intermodal shipping containers. According to Marine Log, Drewry noted several sources for heightened demand for this type of shipping, including increases in crude steel production, oil prices, global GDP, and investor confidence.

Drewry did say that the bump in oil prices could be the exception to these projected increases. Prices are not expected to top $55 per barrel during the next few years.

Financially, Drewry did report a more lucrative second quarter. According to Port Technology, the container shipping industry is expected to earn an accumulated profit of $1.5 billion by the end of 2017. This is despite $16 million in losses during the first quarter. Drewry said in a statement that they are optimistic about how the latest increase in demand will impact shipping companies financially.

“We see no reason to downgrade our profit guidance and will most probably raise it for the next Container Forecaster,” Drewry said in a statement. “Exceptionally strong demand growth in Q1, 2017, and far higher annual contract rates will create even more profitable conditions for the remainder of the year than we had envisioned.”

In their first quarter analysis of 13 shipping companies, Drewry did notice a significant gap in the top earning and lowest earning companies, according to Port Technology.

“The disparate set of results is perhaps the most interesting takeaway from the first reporting season of the year, showcasing how despite claims the industry is increasingly becoming commoditised there remain significant differences between companies in terms of scale, cost structures, trade coverage, customer base and spot-contract ratios,” they said in a statement.

This analysis comes at a time when the shipping industry is changing rapidly, as dry shipping companies make efforts to become eco-friendly, for example. While it may take effort and investment to implement, direct cargo transportation allows for more environmentally sound shipping due to a decrease in time and stops. There are also industry-wide efforts to decrease the amount of greenhouse gases produced by cargo ships.

Whether these changes shape consumer demand remains to be seen.

Leave A Response